Wrongly selected 1040ES

[jahjah]

I wrongly select for my next year's tax to be paid quarterly to IRS and just found out after I received a letter from the IRS on the interest owed. Is there a for me to correct this? I don't want to be making these payments. 

[VolvoGirl]

So did you pay your 2019 current tax due?  Did you think the 1040ES was for 2019 tax due?

You can ignore the 1040ES.  The estimated payments are optional to pay. They are estimates for next year. Turbo Tax doesn't want you to owe next year. They might have printed out if you got a one time large income this year. Like if you took a IRA or 401K distribution or a large capital gain. They DO NOT get sent to the IRS or state with your return.

[VolvoGirl]

Oh if you did pay any 1040ES don't forget to enter the payments into your tax return next year to get credit for them.

[jahjah]

Yes, I already paid my 2019 Tax due back on July 15th. The money was taken from my bank account. I just received the letter from IRS in the mail saying:

Tax you owed when you filed your return: $xxx

Total penalties (see page 3 for more information): $yyy

Payments and credits: $-xxx

Amount due by Sept 14th, $yyy

Page 3 has the following:

Penalty: Failure to pay properly estimated tax (Internal Revenue Code Section 6654)

Description: When you don't pay enough taxes due for the year with your quarterly estimated tax payments, we charge a penalty for not properly estimating your tax. 

It looks like the IRS is charging me for not paying the estimated tax for next year. I inadvertently selected to make quarterly payments for next year's tax and I am being charged now. How do I stop that? Is there a form I must file? Can I just call the IRS to stop this?

[Critter-3]

"It looks like the IRS is charging me for not paying the estimated tax for next year. "

Wrong ... the IRS doesn't know anything about the 2020 estimates that were suggested by the program.  The program calculates an estimated underpayment penalty for not paying estimates in 2019 based on the information you entered however the fed/state reserves the right to calculate the penalty using the info they have on hand including the date you filed and when you paid the balance due.  That is what the current bill is all about ... 2019  not 2020.

As already mentioned the 1040-ES that the program calculated was to keep you from owning again in 2020 and can be ignored if you wish. 

What are estimated taxes?

https://ttlc.intuit.com/replies/3301588

Do I need to make estimated tax payments to the IRS?

https://ttlc.intuit.com/replies/3301891

Why did 1040-ES estimated tax vouchers print out? Do I need them?

https://ttlc.intuit.com/replies/3301872

How does TurboTax calculate my estimated tax payments?

https://ttlc.intuit.com/replies/3301730

[jahjah]

Sorry but this is still not clear to me. It clearly says: Failure to pay proper estimated tax - when you don’t pay enough taxes due for the year with your quarterly estimated tax payments, or through withholding, when required. I just talked to the IRS and they said it is based on the estimated tax, which makes it even more confusing, and she asked me to submit form 843

[Critter-3 · Accepted solution]

If you owed $1000 or more on the tax return  then the IRS can penalize you if you didn't pay in enough in advance so that is why you got a bill.  To avoid an underpayment penalty you need to withhold enough from places like W2 or 1099 forms OR  you can make estimated payments which is why the program populated those forms  you are not required to use. 

 

 

Do I need to make estimated tax payments to the IRS?

PAYING ESTIMATES
For SE self employment tax - if you have a net profit (after expenses) of $400 or more you will pay 15.3% for 2015  SE Tax on 92.35% of your net profit in addition to your regular income tax on it. So if you have other income like W2 income your extra business income might put you into a higher tax bracket.

You must make quarterly estimated tax payments for the current tax year (or next year) if both of the following apply:
- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits. 
 
- 2. You expect your withholding and credits to be less than the smaller of: 
    90% of the tax to be shown on your current year’s tax return, or 
  100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.)